Egdon Resources, the UK onshore-focused oil and gas operator, and EnCore Oil said yesterday they were in advanced negotiations over the acquisition by Egdon of a portfolio of UK and French assets from EnCore.
The assets to be acquired in an all-share deal would comprise of EnCore’s entire interest in 10 onshore UK licences, all in England, two onshore French licences and a 10% stake in the Centrica-operated Ceres gas field in the UK southern North Sea.
Both Egdon and EnCore said the acquisition, to be satisfied in Edgon shares, would be finalised as part of contract negotiations and the transaction would be structured so that on completion EnCore’s ownership would not exceed 29.9% of Egdon.
Mark Abbott, managing director of Egdon, said: “This proposed transaction would mark a step change for Egdon’s portfolio.
“The assets significantly strengthen our opportunity base in the UK and France, with the Ceres field providing further near-term production and cash-flow. We also welcome the confidence placed in Egdon’s ability to add value to these assets by the management of EnCore through taking a shareholding in the company.”
EnCore chief executive Alan Booth said: “We believe that by combining these assets with those of Egdon, we would expose our shareholders to more easily recognisable value in a more material portfolio of similar onshore assets. Egdon, as a committed and well-established onshore player, would be better placed to develop and add significant value to the enlarged asset base.”
A spokesman for EnCore said the assets likely to go to Egdon represented only a minor part of EnCore’s business and it would retain all of its offshore interests apart from the small stake in Ceres.
Egdon had yesterday a market capitalisation of around £10million and EnCore was capitalised at about £45million.
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